@ WTO

India stuck to its stand on food security issues taken at World Trade Organisation (WTO) notwithstanding the pressure by the US, which engaged in hectic parleys with Indian leaders, hoping for a “compromise“.
US Secretary of State John Kerry and Commerce Secretary Penny Pritzker have held a series of meetings with Indian leaders, including Finance Minister Arun Jaitley and Commerce Minister Nirmala Sitharaman, to persuade New Delhi to agree to dilute its tough stand on WTO's Bali package.
New Delhi has insisted that, in exchange for signing the trade facilitation agreement, it must see more progress on a parallel pact giving it more freedom to subsidise and stockpile food grains than is allowed by WTO rules.
After the fifth Indo-US Strategic Dialogue, while External Affairs Minister Sushma Swaraj said she would wait for the outcome of the consultations at Geneva, Kerry hoped that a compromise would be reached with regard to ongoing hectic deliberations.
Kerry said, “We do not dismiss the concerns India has.We believe there is a way to provide for that that keeps faith with the WTO Bali agreement. So we are obviously encouraging our friends in India to try to find a path here, a compromise both need. We think that is achievable and we hope it is achievable“.

The refusal by rich nations to move beyond giving a mere assurance to address India's concerns resulted in the collapse of WTO talks early Friday morning (India time), but top government officials said there is still scope to close the deal thrashed out in Bali by the end of the year.
Questioning the claims made by some of the rich nations that India did not offer solutions, the officials said, WTO director general Roberto Azevedo contacted commerce & industry minister Nirmala Sitharaman last Sunday , two days after India's ambassador Anjali Prasad told members that the government had decided to link the final trade facilitation agreement to addressing India's concerns on food security .
On Monday afternoon, Azevedo sent a formal proposal, suggesting a month-by-month work programme to address India's concerns, which went beyond what he had suggested to Sitharaman in Sydney a few days earlier. Although it proposed a solution by December end, it was “ambiguous“ as it did not provide “substantive content to address the main issue“, an officer said.
Two days later, India responded with two options but made it clear that a trade facilitation agreement was not possible before a permanent solution to the food problem. It dug out the four possible solutions that
G-33, comprising developing countries, had proposed before the Bali ministerial. The first was to keep the subsidy paid to poor farmers for procurement outside the ambit of the formula. The second was to change the base year for subsilution had to be found by December 31,“ a senior officer explained, adding that a draft text of the new framework was also handed over to the WTO boss.
As the Thursday deadline neared, the US and others sought to put pressure on the government with secretary of state John Kerry raising the issue during his meetings in the Capital on Thursday . The government was, however, had a clear strategy of negotiating in Geneva. By calculation from 1986-88 to current market prices.The third alternative was to index the 1986-88 price to current levels and the fourth was to have a permanent “peace clause“ so that there was no challenge at WTO even if the limit was breached.
The second option was to agree to the trade facilitation pact with peace clause until a permanent solution is found.
“We asked for this with the clear understanding that a so The 10% subsidy ceiling is based on prices prevailing in 1986-88 when grains were up to six times cheaper, while the actual subsidy calculations are based on current market prices.
A nationwide Food Security Act is expected to increase the procurement burden, while MSP has increased by around 10% annually over the past few years. By all indications, the trend will continue. Add to that the bonus paid by the state governments.“It's a matter of time before we reach the limit,“ acknowledged an official.
In contrast, other than forced reform at ports and airports, the government sees little benefit from the trade facilitation agreement, as easier customs rules are expected to aid imports into the country compared to exports from Indian shores.
“We have saved MSP and the Food Security Act. If we had stuck to what was agreed at Bali, it would have sounded the death knell for the Food Security Act,“ finance minister Arun Jaitley said on Friday , hours after talks collapsed at WTO. Jaitely , himself a former trade minister, has been critical of the Bali deal since it was signed.
While India has been demanding a review of the food subsidy limit for several years, the developed countries have refused to play ball. In fact, in the run-up to the Bali ministerial last December, the rich countries had even refused to acknowledge the food security proposal submitted by G-33, which includes countries such as Indonesia, Brazil and China. It was only after a link with trade facilitation was established that food security even came on the agenda for the ministerial.
Then, the US and European Union put up stiff resistance saying a tweaking of rules by changing the reference price from 1986-88 to the current rates was tantamount to reopening WTO's agreement on agriculture, a move that will set a bad trend. After India held firm, threatening to block a deal at Bali, the developed countries conceded ground, but only partially. In return for a trade facilitation agreement by July 31, which is to be implemented next year, they agreed not to seek penal action even if the 10% subsidy cap is breached. But there is confusion over how long this “peace clause“ is in place.
One interpretation was that it will only be in place till a permanent solution is found. The other was it will stay intact till 2017.
“It was a play of words and we seem to have settled for a wrong formulation since a crucial comma is missing,“ said a top-ranking official, who did not wish to be identified.
In any case, Indian officials said, there was little effort from the rich countries to address India's concerns as there were only two meetings of the committee dealing with the food security problem, while there have been over 20 on trade facilitation since the Bali ministerial. So, when the Narendra Modi government took charge, India decided to link an agreement on easier customs rules, for which the deadline ended Thursday night, with finding a permanent solution on food security .
The US and EU did not heed India's demand, resulting in the latest stalemate and a fresh round of name calling. Indian officials, however, maintained that all is not lost and when WTO reassembles after a vacation, fresh attempts would be made to salvage the deal and things may be back in place by the end of 2014.
While the West has described India as the deal breaker, the government is refuting the charge. “It is not justified for the simple reason that the deal was not broken. Pushing the date from July 31 to December 31 is not bringing the heavens down,“ an officer said.